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Uberrima fides is a Latin term. The terms uberrima fides and uberrimae
fidei, although grammatically distinct in Latin, are often used
interchangeably in English. It means "utmost good faith".
It is one of the obligation of the parties involved not only in the
insurance contract but also in other forms of commercial agreements
/contracts that they must act with utmost good faith prior to the
conclusion of any particular transaction. This is because fraud,
misrepresentation or deliberate non- disclosure of material facts in any
contract, would make it unenforceable and invalid for the purpose of
protecting the innocent party from being deceived.
In order to constitute a breach of Uberrima fide from either party, the
following three criteria should meet— (a) The statement, act or omiswion
should be a form of non- disclosure or misrepresentation or fraud; (b) it
should be within the knowledge of the doer, or (c) it should be a material
fact effecting the subject the policy / agreement/ contract.
A contract of insurance is contract uberrimae fidei and there must be
utmost good faith on the part of the assured. This imposes a duty and an
obliging on the assured to make a full disclosure of all material facts
which would affect the mind of the insurer whether to accept the risk or
not and on what terms. A false answer or non-disclosure or concealment of a
material fact will avoid the policy, even though there is no fraud and the
concealment is innocent. ….. [Rohini Nandan v Ocean Accident AIR 1960
Cal, 969]
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